Scottish procurement policy handbook

This handbook provides guidance on the rules and policies that apply to the procurement activities of public bodies in Scotland and highlights some key legal obligations.

20. Prompt Payment

Section 15 of the 2014 Act requires public bodies to set out in their Procurement Strategy how they intend to ensure all payments made to contractors and sub-contractors are paid within 30 days of receipt of a valid invoice. They are recommended to go further and have a clause within their contracts which requires payment within 30 days throughout the supply chain. Payment performance and related complaints should be monitored as part of contract management arrangements. This can lead to the following benefits:

  • better relationships with suppliers
  • more reliable cashflow for suppliers which reduces the risks of financial problems and any impact this would have on contract delivery
  • early warning signs of potential supplier failure: delays in paying sub-contractors in the supply chain could be indicative of deeper financial problems.

SPPN 2/2022 provides guidance to promote contracts being awarded to bidders with a good payment performance history and systems in place so that their supply chains should be paid on time in accordance with the terms within their contracts.

Prompt payment should be monitored as part of the contract management activity, addressing any issues with the prime contractor during the life of the contract to ensure the reliability of the supply chain. It is the prime contractor’s responsibility to monitor and support prompt payment to all sub-contractors involved in delivering a public contract.

Project bank accounts allow contractors and sub-contractors in the supply chain to be paid directly. Their use is particularly required for construction projects where late and extended payment terms between businesses can be common, in accordance with CPN 1/2019: Project Bank Accounts - Revised Thresholds and Procedures. The Scottish Government provides official guidance on the use of project bank accounts.



Back to top